BillShrink Boils Down Credit Card Plans for Consumers

BillShrink, a Silicon Valley Internet startup, has launched a new free service that helps consumers to make sense of the ever-changing offers, rules and rewards programs in the credit card market.

Here's how the seven-employee firm's service works: Consumers go to BillShrink.com and fill out an online survey that asks questions about their credit habits. Questions include whether they pay off their balances each month, how much they spend each month, and on which items and services they spend the most money.

Then, BillShrink spits out a credit card recommendation, based on its data on roughly 200 credit cards issued by various banks across the United States. If a consumer actually signs up for the recommended credit card, BillShrink gets paid by the credit card company or the bank that issues the credit card.

First Mobile Phones, Now Credit Cards

The new BillShrink offer comes just four months after the Menlo Park, Calif.-based company launched a similar service focused on the mobile phone market. It uses information from AT&T, Verizon Wireless, Sprint Nextel and T-Mobile to produce recommendations for wireless plans.

BillShrink, which raised a series A round of venture capital from Bessemer Ventures in the summer of 2007, is led by
PhotoBucket veteran Peter Pham. PhotoBucket is a digital photo exchange service now owned by Fox Interactive Media.

Pham, 33, took over as CEO at BillShrink five months ago.

"[BillShrink] was built out of the frustration of trying to compare cell phone bills and offerings without having to use a spreadsheet," Pham told the E-Commerce Times. "It's interesting, timing wise, because the Federal Reserve is trying to get credit card companies to be a bit more consumer-friendly."

The introduction of a credit card service seems especially relevant to consumers now, given the upheaval on Wall Street this week that brought several storied financial institutions to their knees.

"It's not a propitious time to be overextending yourself in credit card debt, for sure, because no one knows just how much more serious the crisis will get," Joe Ridout, a spokesperson for
Consumer Action, told the E-Commerce Times. "At the same time, for someone not in a position to pay off their balance month to month, [BillShrink] is a good tool for finding a low-interest rate card."

Consumer Action is a San Francisco-based nonprofit consumer advocacy group founded in 1971.

More Options for Consumers

Companies like BillShrink offer consumers a plethora of information about wireless phones and credit cards, said Ridout. However, he cautioned consumers to use multiple sources to get the best deals and stay abreast of trends in those markets.

"It's always good to have more free services that give consumers more information," he said. "[BillShrink is] a good source of information, but it's not a one-stop shop for credit cards."

Even the banks and credit card companies are getting into the recommendation game.

"Some of these sites are being issued by banks themselves," Ridout said. "One is from CapitalOne, called
'CardLab.' They analyze all the cards they offer. But having a site that offers data on cards across all the major banks is much more useful to consumers."

Next: Car Insurance and Mortgages

BillShrink isn't stopping at mobile phones and credit cards.

The way Pham sees it, the startup can get into any market where information, rules, offers and the like change on a daily or monthly basis.

"Over time, we'll keep adding these services for consumers and helping them save money in things like car insurance and mortgages," Pham said.